Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and Investors (Wiley and SAS Business Series)
Product Type: Book
Product Price: $49.95
Manufacturer: Wiley
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Description
"Clark and Mingyuan start with an insightful and comprehensive description of how market participants contributed to the current crisis in the residential mortgage markets and the root causes of the crisis. They then proceed to develop a new residential mortgage lending system that can fix our broken markets because it addresses the root causes. The most impressive attributes of their new system is its commonsense return to the basics of traditional underwriting, combined with factors based on expert judgment and statistics and forward-looking attributes, all of which can be updated as markets change. The whole process is transparent to the borrower, lender, and investor." —Dean Schultz, President and CEO, Federal Home Loan Bank of San Francisco
"The credit market crisis of 2008 has deeply affected the economic lives of every American. Yet, its underlying causes and its surface features are so complex that many observers and even policymakers barely understand them. This timely book will help guide nonspecialists through the workings of financial markets, particularly how they value, price, and distribute risk." —Professor William Greene, Stern School of Business, New York University
"This book is a well-timed departure from much of what is being written today regarding the current foreclosure and credit crisis. Rather than attempting to blame lenders, borrowers, and/or federal regulators for the mortgage meltdown and the subsequent impacts on the financial markets, Clark and Mingyuan have proposed a groundbreaking new framework to revolutionize our current lending system. The book is built on the authors' deep understanding of risk and the models used for credit analysis, and reflects their commitment to solve the problem. What I find most profound is their passion to develop a system that will facilitate new and better investment, especially in underserved urban markets that have been disproportionately impacted in the current crisis. I applaud the authors for this important work, and urge practitioners and theorists alike to investigate this new approach." —John Talmage, President and CEO, Social Compact
"In the wake of the credit crisis, it is clear that transparency is the key to not repeating history. In Credit Risk Assessment: The New Lending System for Borrowers, Lenders and Investors, Clark Abrahams and Mingyuan Zhang describe a new lending framework that seeks to connect all the players in the lending chain and provide a more holistic view of customers' risk potential. As the financial services industry recovers from the mortgage meltdown, the Abrahams/Zhang lending model certainly offers some new food for thought to laymen and professionals alike." —Maria Bruno-Britz, Senior Editor, Bank Systems & Technology magazine
Reviews
Rating: 5 / 5
Date: 2010-05-24
Summary: "Excellent book on the financial crisis"
This is perhaps one of the best credit risk book that I have read in my years of working experience. Unlike many hardcore credit risk text, this book explains the entire financial crisis in simple tangible terms which any layman can understand. Unlike many books that talks about greed and other organizational issues, this excellent book targeted the fundamental errors in credit risk modeling with excellent recommendations to patch up such errors.
Regardless of the amount of patching up, any poorly built models are inherently unstable and collapse during times of crisis such as the recent credit crunch. While many people blamed the investment banks, if banks have adopted the CCAF recommended by the authors, you will be surprised that how easy it is to spot those problematic structured product and the risk behind them.
An excellent book for credit risk professionals who needs a framework to deal with credit risk.
Rating: 4 / 5
Date: 2009-06-12
Summary: "An Excellent Summary of Credit Risk for the Layman"
Though one of the co-authors is a friend of mine, I like to think that is not the reason I found this book so impressive. The CCAF (Comprehensive Credit Assessment Framework), that Abrahams and Zhang lay out, offers an excellent paradigm for systematizing the business rules that lenders use for augmenting credit scores in the decisioning process.
What I found particularly compelling was the case for using this tool as a supplement to the rating agencies' grades, as we begin to think about what a revamped securitization market might look like. The CCAF, arguably, reduces the opacity associated with these instruments, thereby promoting incentive compatibility between originators and investors.
Lastly, this book is written in a non-technical style, with numerous intuitive examples, that would appeal to the layman reader.
Rating: 5 / 5
Date: 2009-06-02
Summary: "Credit Risk Assessment"
Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and Inves
Credit Risk Assessment, the new book, by Clark Abrahams and Mingyuan Zhang is a must read for anyone who desires to learn about the recent financial crisis, the various causes and effects. This book provides a clear and exceptionally well-written portrayal of the crisis from the perspective of investors, lenders, borrowers and the government. What is most remarkable about this book is the manner in which it explains very complex financial events in readily understandable terms that are accessible to virtually anyone willing to invest a few hours in a most interesting read and analysis.
The authors identify the primary causes for the current financial crisis and the perfect storm of events that precipitated the worst financial crisis since the great depression. The authors go on to explain how the process of loan underwriting, inclusive of principal-agent problems and adverse incentives, worked to create an improper assessment of the risks inherent in many financial instruments. They call for a comprehensive risk assessment framework that would provide all parties with a degree of transparency going forward that would greatly reduce the probability of another such pronounced downturn.
There are no shortage of books on the recent financial crisis, but one would be hard-pressed to find a treatment as comprehensive as this one and yet written in terms that are readily understandable. I thoroughly enjoyed this book and commend the authors on their achievement.
Rating: 5 / 5
Date: 2009-05-19
Summary: "Compelling, accessible explanation of causes, effects, solutions re financial crisis"
The authors of Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and Investors have accomplished something thought by many to be nearly impossible - they have made our current economic mess understandable both in terms of causes and effects. And with the complexity associated with the underlying economic theory and related financial machinations this is no small feat.
I found their account of the circumstances and underlying weaknesses in our financial system that lead to the current morass to be very enlightening and foundational to my own desire to develop a better understanding of this system - especially related the checks and balances or lack thereof. While I lack the technical expertise and historical context to perhaps fully appreciate some of the material I nonetheless found the book to be extremely accessible overall. I attribute this in part to the clear, concise style used by the authors. What made the book particularly insightful for me was the fact that I like many others watched their description of the problems and resulting consequences play out before my own eyes as I witnessed the failure of one of the fastest growing S & L's in our region of the country due to questionable real estate lending practices and lack of risk management by what was otherwise a relatively conservative financial institution.
Finally, what makes this book different from others is that the authors prescribe a solution to at least a large part of the problem - a new, more comprehensive system for measuring, exposing, and ultimately mitigating systemic risk as opposed to institutional risk.
My only quibble with the book was that it was at times somewhat redundant. However, this may have been by design in that the authors were trying to reinforce the ideas, concepts and lessons. Otherwise, Credit Risk Assessment is the best book on the topic that I have read to date.
Rating: 5 / 5
Date: 2009-05-04
Summary: "Credit Risk Assessment: The New Lending System for Borrowers, Lenders, and Investors"
Credit Risk Assessment is a book for the masses! For the banking executive the book is an enhanced risk assessment tool for mitigating risk in the mortgage origination business. However, for the layperson this book is a great source for learning about and understanding the intricacies of mortgage lending. In simple terms, the authors have explained why the mortgage industry was susceptible to the lastest economic disaster and how lending/risk models can be improved for matching borrows with appropriate loan products. After reading this book it was apparent to me that banks were originating mortgages like a driver navigating a car on the open road at night with headlights. Headlights provide the illusion of safety because they bring the lines marking the middle and the edge of the road into view. But, there are many unforeseen risks. I would rather make the same journey at daytime when I have a clear view of the road and the surrounding landscape. Credit Risk Assessment has drawn the sun above the horizon! It has cast a light on the shotrcomings of the risk models that have been in use for years -risks that you cannot see at night beyond the reach of headlights. As a trained economist, I could not agree with the authors any more about including "non-traditional" economic data. CCAF is a risk model that will capature the true characteristics of the borrower, unlike today's antiquated models. BRAVO!